Rebuilding South Africa’s industrial base

South Africa's Minister of Trade, Industry, and Competition Ibrahim Patel recently announced that local companies had committed a substantial R260 billion to localization over the next five years. This commitment follows the successful implementation of the previous year's pledge of around R40 billion towards localization. Eustace Mashimbia, the CEO of Proudly South African, joined CNBC Africa to discuss the impact of South Africa's localization strategy on the economy. Mashimbia expressed his optimism and encouragement regarding the progress made in localization efforts. He highlighted the increase in the number of major corporates making localization commitments, showcasing a positive trend in supporting locally made products. From 25 corporates in 2018 to 17 in the current year, the momentum continues to grow as more companies recognize the beneficial impact of prioritizing local procurement. One of the key sectors displaying significant progress in localization is the automotive industry, particularly entities like SAB and Coca-Cola Beverages South Africa. The sugar master plan and auto's master plan have incentivized these industry players to increase their usage of locally sourced inputs, driving economic growth and supporting local businesses. Despite the strides made by the private sector, challenges persist within the public sector following a recent court ruling. The uncertainties surrounding the procurement bill have created a complex environment, prompting entities to develop their localization policies. While progress is slower in the public sector, the private sector voluntarily embraces localization efforts driven by a sense of responsibility and strategic business benefits. The textile industry emerged as a significant player in the localization drive, with initiatives like the local walk and the local fashion police program promoting locally made clothing, footwear, and leather products. Major retailers like the Foshini group have increased their capacity for local manufacturing, signaling a shift towards supporting domestic industries. One of the pressing issues hindering localization efforts is the influx of dumped goods into the country at artificially low prices, posing a challenge to local producers. E-commerce platforms exacerbate this issue by importing cheap goods, affecting local businesses and tax revenues. Collaborative efforts between the government and industry stakeholders aim to address these challenges and level the playing field for local manufacturers. In conclusion, South Africa's localization strategy plays a vital role in rebuilding the industrial base and stimulating economic growth. The commitment of major corporates, along with sector-specific master plans, is driving the transformation towards a more resilient and self-sustaining economy. While challenges remain, collaboration between the public and private sectors is essential to overcome obstacles and ensure the success of localization initiatives.